Professional Documents
Culture Documents
3%.
2 towerswatson.com
31%
of workers agree
employees in
positions above them
are choosing not to retire,
Contrasting Perspectives
All employees
Challenging work
Base salary
Challenging work
Career advancement
opportunities
Base salary
Job security
Ability to impact
performance
Base salary
Career advancement
opportunities
Career advancement
opportunities
Career advancement
opportunities
Job security
Health/Wellness
benefits
Organization
reputation
Base salary
Challenging work
Organization values
Convenient work
location
Organization values
Organization
reputation
Organization
reputation
Learning opportunities
Organization
performance
Learning opportunities
Organization
performance
Health/Wellness
benefits
Job autonomy
Convenient work
location
Employer responses
Employee responses
Employers
41%
of employers intend to
raise organizational financial
targets over the next three years.
30%
4 towerswatson.com
34%
Only
of employers measure
the effectiveness of their performance
management process.
Interestingly, while half (51%) of our employer
respondents think they are moderately to very
effective at linking salary increases to individual
performance results, our employee respondents
disagree. Only a third (36%) see a clear link
between their performance and their pay, although
over half (55%) agree people at their company are
held accountable for their performance, and 58%
said their most recent performance review was
accurate. So messages about accountability and
measurement are getting through. But theyre not
being supported by the most important part of
the performance management process payouts
commensurate with actual contribution to results.
Employees believe job-related stress levels are
still manageable, but they are also interested
in gaining more control over their work lives.
Currently, a majority of our employee respondents
(55%) agree stress is manageable. But they do
expect to work more hours over the next few
years, and they are interested in ways to deal with
added pressure. Even now, for instance, 42% of
the employee respondents would trade paid time
off for more flexibility in their work arrangements.
In addition, continuing a trend noted since our
2007 study, a convenient work location was
among the top five reasons for choosing a
job. This underscores yet again the extent to
which employees are eager for anything that
eases work/life tensions. Finally, stress figures
prominently on employees list of reasons for
leaving a job, underscoring the impact it has on
job decisions these days.
30%
38%
Just
of employees agree their
employer provides career-planning tools
and resources that are helpful.
41%
45%
Just
of employees are
confident they have enough money to live
comfortably 15 years into retirement;
only
Employers
30%
55%
31%
By
presenting the total rewards picture, employers gain the
flexibility to shape the work experience in different ways
at different phases in the companys life cycle, as well as for
different segments of the employee population.
6 towerswatson.com
Optimize
Total
Rewards
Training/Development
Mentor programs
Career management programs
Talent mobility programs
Discretionary technology
Flexible work programs
Work/life programs
Corporate social responsibility
programs
Well-being programs
gn
A li
En
Measurement
Pe
rf
-Based
nce
ma ards
or Rew
l
na
s
Performance-Based Rewards
iv e
Dr
Value Propo
loyee
siti
p
on
Em
Base pay
Perquisites
Allowances
Retirement
Health care
Life and disability
Other welfare benefits
Wellness initiatives
EAP
Voluntary benefits
Time off
Fou
n
Rewdatio
ar
d
v ir o C a r e e r a n d r d s
n m e n t a l R e wa
Communication
Governance
Administration
Total Rewards Strategies for the 21st Century 7
48%
of employers have
formally articulated a
total rewards
strategy.
A Solid Foundation
Assuming your organization is ready to embrace
total rewards in a more comprehensive way, the
starting point is to define a desired future state and
understand how the current state compares to it.
That requires a detailed drill-down into five areas
that, collectively, provide information and insights on
how to implement the new strategy and direction.
Business plans and performance. How is the
organization performing relative to peers? What
are its strengths and weaknesses? What drives
value in the business? What do its growth plans
involve: Acquisitions to expand market share? A
bigger footprint in other parts of the world? Major
investment in research and development for a
new product pipeline? Divestiture of ancillary
businesses?
Reviewing what the next three to five years
look like from the point of view of business and
financial performance will surface important
workforce and talent implications, such as
the organizations risk exposure to insufficient
numbers of workers or a shortage of skills in
various parts of the world, or which skills or roles
will be more or less important to the organization
in the next few years, or how competitive various
labor markets are likely to be and in what areas.
8 towerswatson.com
95%
37%
But just
of employees believe
senior management is doing a good job
developing future leaders.
44%
And only
agree leaders have a
sincere interest in employees well-being.
Workforce profile and personal perspectives. The
next area of focus is the workforce itself, starting
with a demographic profile that encompasses
age, level, skill, education, retirement patterns,
performance, geographic spread, employment
arrangements and the like. This ensures a clear
picture of the state of the current workforce,
as well as gaps and potential surpluses in the
numbers and skills of people both now and over
the next few years, across divisions and locations.
But a profile alone misses critical nuances in what
people want from their work experience and how
their needs should influence attraction, retention
and engagement programs. Whether through
employee surveys, optimization trade-off analyses
or other approaches to data gathering, you need
to look closely at the wants and needs of the
population, particularly those segments with the
skills essential to driving growth.
This type of fact finding helps pinpoint whether
your assumptions about workers are on the
mark. Given the cost of the reward components
involved, it makes sense to ensure you are not
only investing in the right things, but doing so at
the right levels, neither over- nor underspending,
both of which can occur without accurate testing
of long-held assumptions.
Given
10 towerswatson.com
55%
communicating
performance expectations
to employees.
43%
believe it has
And
helped create a high-performance
work culture.
The
ability to coordinate
design and delivery, and
build more integrated reward
strategies, will be essential in
shaping an effective overall
work experience.
Individual flexibility: How much your organization
is willing or able to embrace flexible or alternative
work arrangements for all or parts of the
workforce, and the accommodations it will need to
make to manage people working in different ways
Segmentation: The extent to which the
organization will customize the work experience
and related rewards for different parts of the
organization whether by skill type or level,
job role or function, geographic location or
other characteristics and the extent to which
customized experiences remain broadly consistent
under an overall global umbrella
Delivery: The relative impact of various factors
shaping delivery, from cost, to ease of employee
understanding, to ease of administration, to
efficiency of required technology, to rapid adaption
of future enhancements
Employee Mindset/
Behavior
Customer Behavior
Financial Performance
Foundational
Salary/Core benefits
Engagement
Customer attraction
Revenue growth
Retention
Customer retention
Repeat business
Labor/Operating cost
Performance-based
Incentives
Career/Environmental
Career management
Performance
management
Training
Manager effectiveness
Productivity
Performance
Knowledge/Expertise
Role/Skills
Customer satisfaction
Loyalty
Company advocacy
Operating margin
Net income
Return on assets
Return on equity
Return on invested
capital
Total shareholder return
Conclusion
For U.S. employers, the perfect storm of forces
already in play has a direct impact on reward
program strategy and outcomes, raising the
stakes on making decisions from a comprehensive
perspective that reflects business strategy, financial
constraints and workforce needs. In addition to
ongoing concerns about the economy and the
sustainability of current labor costs, implementation
of the Patient Protection and Affordable Care Act
will also affect costs, as well as the nature and
shape of the deal, and the respective roles and
responsibilities of employers and employees.
A
total rewards approach gives employers the
tools to view their labor cost expenditures
holistically and determine how to channel
them in optimal ways.
Added pressure comes from an increasingly complex
labor market both inside and outside the U.S.
where dramatic differences in the supply and demand
of talent across industries, geographies and skill
groups complicate workforce planning, selection and
deployment. Factor in technology and globalization
specifically, their combined effect on the ability
to meet workforce and performance goals across
a diverse set of cultures and work environments
and theres little question that traditional
approaches to reward design and delivery are ill
suited to the current environment.
12 towerswatson.com
towerswatson.com